–with a thriving extractive industries sector

WITH announcement of the discovery of significant oil deposits in Guyana’s waters, Guyana can anticipate a coming boom in this sector; but focus must be placed on the effective management of this non-renewable resource, while balancing that with Government’s push towards a green economy.In the May 19 edition of The Public Interest, President David Granger referred to this balance as “walking on two legs” when he explained that the country can manage both oil exploration and sustainable development.

“We need the investment in the petroleum industry to produce natural gas. It will provide employment, and will help us to produce a commodity which can be sold in the international market. At the same time, we will be generating more sustainable energy, and that will make us less dependent on fossil fuel and less dependent on petroleum. So it won’t happen overnight; the two can exist side by side, they won’t be in conflict. It is a win-win situation for Guyana,” the President had said.

With oil production projected to begin in 2020 at a rate of 100,000 barrels per day, President Granger has also indicated that not only is his administration’s policy focused on managing the need to exploit non-renewable resources, but Government intends to properly manage oil revenues for the good of all Guyanese.

In his message on the occasion of Guyana’s 50th Independence Anniversary, the Head of State had said, “Guyana’s economy will be enriched by the discovery of petroleum. We look forward to preparing our people and the economy for the exploitation of this rich resource. We shall create a sovereign wealth fund to ensure that all generations benefit from the gains that are expected to flow from this discovery”.

A green and diversified economy, thriving not only on oil wealth though, is the future President Granger envisions for Guyana. He pointed out that the importance of economic diversification and oil revenue can, no doubt, provide much needed resources for value-added production.

“Our national economy must be reshaped to reduce our dependence on the six sisters – bauxite, fish, gold, rice, sugar, and timber. Guyana’s economic policy over the next four years will be determined by the transition to greater value-added production.”

There have recently been some encouraging signs, as companies are beginning to enter the sector. President Granger has commended businesses like GAICO Construction and General Services Incorporated for launching its Oil Spill Services facility at its wharf at Nismes, West Bank Demerara.

“Foresight and entrepreneurship will allow businesses to benefit from local content. Strategic partnerships with regional and international firms will enhance the capability of local firms through the transfer of knowledge and technology. We are confident that the production of petroleum will create new opportunities, although it will not end our economic challenges,” President Granger said.

Kaizen Environmental Services (Guyana) Incorporated (KESGI) also took up the mantle of foresight with the September 1, 2016 launch of an environmental management laboratory in Kingston, Georgetown. KESGI is an extension of Kaizen Environmental Services, a Canadian company which specialises in environmental management services and also has a branch in Trinidad and Tobago. KESGI will offer laboratory services, air quality testing, noise monitoring services, and will work on the development of a world-class waste treatment facility that is similar to the one established in Trinidad.

The Ministry of Natural Resources has a packed agenda in ensuring that these industries are not only manned, but are managed in a manner that will ensure that all Guyanese can benefit from the gains of the emerging oil and gas sector, so as to ensure a higher standard of living and achieve the Government’s mandate of ‘a good life for all Guyanese’.

Headed by Minister Raphael Trotman, the Ministry, prior to January 1, 2016, fell under the umbrella of the Ministry of the Presidency. Now, as the country prepares to deal with the unique opportunities and challenges that come with a thriving oil and gas sector, the Ministry’s mandate has, since June of this year, shifted.

Prior to June, environmental management through the Protected Areas Commission, the Environmental Protection Agency and the Guyana Wildlife Management Authority fell within the Ministry’s purview, but these responsibilities have since been separated so as to allow a more streamlined focus of each area.

Government is working to prepare Guyana at a policy and legislative level for the management of the oil and gas sector. Minister Trotman said that, over the last several months, much focus has been placed on capacity building in the areas of developing laws and regulations, seeking international help and support, and developing industry training.

Consultations are being done for the crafting of legislation that would cover the management of local content; ensuring that Guyanese benefit from the gains of the industry, laws governing the Sovereign Wealth Fund, establishment of a Petroleum Commission, and management of the environment. The Minister has said that efforts to reform the existing Petroleum Act are also underway. The Ministry aims to have this raft of legislation ready for Cabinet by November of this year.

While oil production itself is not labour-intensive, the industry promotes employment in the sector as a whole, due to the wide range of support services that will be required to ensure it is properly managed and regulated. In addition, increased revenues will mean more opportunities for job creation.

Minister Trotman has noted that the new sector could see an increase in the demand for professions in public relations, engineering, accounting and auditing, legal services, security, and even laundry services.

“Almost like a cork floating up, the entire economy will be lifted,” the Minister said. The Ministry is therefore working with entities such as the Private Sector Commission (PSC) and the Guyana Manufacturing and Services Association Limited (GMSA) to prepare for these prospects.

The Ministry also recently hosted a lecture for students on the importance of education in the development of the oil and gas sector. The idea for the lecture originated from the observation that Guyana’s youth have begun to expand their list of aspirations, given the country’s future in oil. Some have even expressed a direct interest in careers in the oil and gas industry.

Other areas of preparation, Minister Trotman has said, include the establishment of a Sovereign Wealth Fund, a state-owned investment fund made up of revenues gained from Guyana’s extractive industries. The Ministry has also received support from the United States State Department as well as the World Bank, the latter of which will provide assistance for Guyana to achieve compliance with the Extractive Industries Transparency Initiative (EITI), an international organisation which assesses the levels of transparency regarding countries’ oil, gas, and mineral resources.

“The initiative is to ensure that we become part of a group of like-minded countries that would like to see their resources benefit the people… The people own the resources and governments are the trustees on behalf of the people,” he has said.

The extractive industries sector has, as a whole, served as a key buttress for Guyana, having served as one of the major income-earners for the economy. Over the past six months, the economy registered two per cent growth, up from the 2015 recorded 0.9 per cent for the same period. This strong showing in the overall growth is largely due to the successes of the mining and quarrying sector, which grew by 65.7 per cent.

At the commissioning and gold-pouring ceremony of the Guyana Gold fields Incorporated and Aurora Gold Mine Incorporated, in September last year, President Granger said that despite the challenges faced, particularly within the gold mining industry, a surer economic foundation with better administrative controls would enhance the livelihood of miners and residents in the hinterland, where the majority of mining grounds are located.

Within the Natural Resources Ministry, the Guyana Geology and Mines Commission (GGMC) is the entity which holds the primary responsibility for the monitoring of the mining industry. Acting Commissioner of the GGMC, Mr. Newell Dennison, has said that despite a downturn in the mining sector, which started last year, there still remains much potential in the traditional sectors of mining in Guyana.

Giving an assessment of the various sectors within the industry, Mr. Dennison said that gold and diamond mining continue to be the strongholds in the industry. With gold declaration at about 350,000 ounces thus far for the year, this places the industry on a good trajectory to reach its 600,000 ounce projection by year end.

However, Mr. Dennison said that bauxite and other quarry products continue to struggle, due to a lack of adequate markets; while the non-traditional minerals sector remains underdeveloped. In this regard, the Acting Commissioner said, efforts should be made to highlight the benefits and opportunities that non-traditional minerals hold.

“We, as an organization, have to get out there and do an inventory of what is there, and show where the potential is, so that potential miners can proceed and pursue alternative minerals… It is not about forsaking the traditional for the non-traditional, but to give it little more diversity,” he said.

To ensure that miners get adequate assistance to overcome the challenges of their operations, the GGMC offers technical support which aids in monitoring the activities of the miners; advises on best practices; and ensures that the mining regulations are adhered to throughout their operations, so as to allow them optimum productivity.

Meanwhile, in other areas regarding the well-being of miners, Coordinator-Administrator of the Guyana Mining School, Mr. John Applewhite-Hercules, stated that the main aim of the school is to provide training to miners so as to ensure they are conversant with the laws and regulations of mining, and that they are taught the safety regulations of the mining sector.

Mining safety has been a significant concern over the past year, following a large number of fatalities that have occurred on mining sites over the past year. Following these occurrences, a Commission of Inquiry was ordered last year by the Government so as to address the causes of these incidents.

He said that many miners are unaware of materials that are available that could assist them with their mining operations, while some others do not adhere to guidelines set out by the GGMC that are set to guide their prospecting efforts.

“What has happened over the years is a culture of hit-and-miss mining, where the miners invest in equipment, take chances by going into the bush, and try their luck; and in many cases they don’t find gold. So this hit-and-miss culture is one of the fundamental reasons that result in a range of unsafe mining practices,” he said.

Nevertheless, Mr. Hercules said, there has been a decrease in the number of fatalities for this year in comparison to last year, and that adequate training can be a main contributor to this.